My personal blog about international trade, public policy & politics, pop culture, and stuff that probably interests only me

Wednesday, July 29, 2009

A Lesson In Rent-Seeking, Farmer-Style

Who knew farmers were such good lobbyists and their Senators were so attentive? (Note: rhetorical, sarcastic question.) The Politico reports today that a schism in the "Farm Lobby" has developed over the Senate's Cap-and-Trade legislation:

Cracks are emerging within the powerful farm lobby, as the agriculture community fractures over the sweeping climate and energy bill expected to be taken up by the Senate this fall.

...

Though most farm lobbyists see offsets as a lucrative revenue stream for at least some agriculture producers, not all back the legislation. The divide largely stems from whether farm groups believe global warming is a major threat to agriculture. One key group — the American Farm Bureau Federation — believes that higher fuel, fertilizer and other costs resulting from climate legislation could hurt farmers more than higher temperatures. “We just don’t think that the costs are going to outweigh any money that you get from offsets,” said Rick Krause, senior director of congressional relations for the AFBF.

But the National Farmers Union, which represents roughly 250,000 farm families, believes that changed weather patterns stemming from global warming could have a significant impact on farmers’ livelihoods.

Uninteresting DC inside baseball aside, the Politico article is great because it provides a perfect example of political rent-seeking by a powerful lobbying group and how it can simultaneously destroy legislation and line the interest group's pockets with taxpayer cheese. Keeping in mind that a cap-and-trade can only "work" if emissions are, duh, capped, check out the awesome shwag (bolded) that a few Senators have snagged for their farmer buddies. I provide my notes in [CAPS]:

The climate and energy bill passed by the House in late June allows polluters to buy “offsets,” essentially paying to implement carbon-reduction programs on farms or forests. The offsets reduce the total greenhouse gas emissions of the polluters, allowing them to stay under the emissions cap, and give farmers an additional revenue stream. Under a deal negotiated by Rep. Collin Peterson (D-Minn.), chairman of the House Agriculture Committee, the USDA, instead of the Environmental Protection Agency, would oversee the offset program. [YES, IT MAKES PERFECT SENSE FOR THE USDA, INSTEAD OF THE EPA, TO ADMINISTER A CRITICAL ASPECT OF AN ENVIRONMENTAL PROGRAM THAT AFFECTS FARMERS AND NON-FARMERS ALIKE.]

The House legislation would cap the annual amount of domestic offsets, but, in the Senate, Peterson and farm lobbyists are pushing to include unlimited offsets. [UNLIMITED OFFSETS = UNLIMITED CARBON EMISSIONS = THE BILL IS WORTHLESS.] They’d like to increase opportunities for farmers to earn offset credits for programs they already have in place, a practice that supporters call “stacking credits” and that opponents deride as double-dipping. Farm lobbyists are also pushing the Senate to provide a percentage of free allowances to the agricultural sector to help cushion the economic impact on farmers and to fund the development of new technologies to increase production efficiencies. ["FREE ALLOWANCES" = "LUCRATIVE REVENUE STREAM" = FREE MONEY, WOOHOO!]

...

Smaller groups are split over how the offsets would affect their industries. [I.E., WHETHER THEIR FREE MONEY AND UNLIMITED OFFSETS WOULD MAKE UP FOR MORE EXPENSIVE INPUTS/ENERGY]

Cotton, potato, fruit and vegetable growers might see less benefit from offsets than would wheat and corn growers, farm lobbyists say. ["NO FAIR, YOU GET MORE FREE MONEY THAN I DO!"]

“If there are certain significant segments that aren’t going to be included in this thing, that’s part of our decision-making process,” Kraus said. ["WE'LL OPPOSE THIS UNLESS THERE'S ENOUGH FREE MONEY FOR EVERYONE."]

The NFU is lobbying for the legislation to include resources for farmers who have a tougher time participating in offset programs. [NFU DEMANDS EVEN MORE FREE MONEY FOR THOSE THAT DON'T EMIT A LOT OF CARBON.]

Other differences have arisen over a proposal that would increase the minimum amount of ethanol mixed into gasoline from 10 percent per gallon to 15 percent. Farmers are pushing the proposal, which would increase the market for ethanol, but ranchers fear higher feed and fuel costs. ["INCREASE THE MARKET" = FORCE PEOPLE TO BUY MORE ETHANOL AND THUS GIVE CORN FARMERS AN INCREASED "REVENUE STREAM" FROM A HORRIBLY INEFFICIENT AND EXPENSIVE FUEL.]

Sen. Tom Harkin (D-Iowa), chairman of the Agriculture Committee, is considering inserting language in the climate bill that would raise the minimum blend to 15 percent — even if that means overriding a decision by EPA, which is currently reviewing the proposal. [THAT PESKY EPA AGAIN!]

“It is my feeling that EPA has a strong bias against ethanol,” he told reporters earlier this month. “But we can also legislate it. We can legislate a change.” [YES, THE "BIAS" IS THAT ETHANOL IS NOT ENVIRONMENTALLY FRIENDLY AND INCREASES FOOD PRICES.]

So to recap: Farmers Lobby has successfully lobbied to remove the "Cap" in the Cap-and-Trade Bill, and they're getting paid a lot of taxpayer money to do it. Very impressive.

Is is any wonder why we libertarians are suspicious of any government plan, regardless of how "well-intentioned" it might be?